EU Leaders Cheer New Coronavirus Recovery Package Amid Fears of Resurgence

Even as European Union leaders celebrate their historic coronavirus recovery package agreement, some regions and countries are bracing for a possible resurgence of the infection.  Belgium, Sweden, Luxembourg and Portugal count among others reporting an increase in cases. Parts of Barcelona, Spain have gone under lockdown. And in another hard-hit country, Italy, the Lazio region that includes Rome warned also of possible local lockdowns, if more clusters of the infection are found.  Meanwhile, France on Monday imposed a face mask requirement for all indoor public spaces, threatening violators with a $155 fine. The country has seen a modest rise in cases, but a more worrying spike in areas like the northeast, Brittany, and the territory of Mayenne.  “At this point we are very far from a second wave,” French Health Minister Olivier Veran told France Info radio Monday.  Still, he warned, if the trend continued, the government may consider regional or even nationwide confinement measures. “All options are on the table,” Veran said.  With European economies battered by the pandemic’s fallout, such a scenario likely sends chills through many capitals. In France alone, the first lockdown will contract the economy by roughly 9 percent this year, according to the INSEE statistical agency.  “I think a second wave that would need a lockdown, either national or regional, would be very costly from an economic perspective,” said Gregory Claeys, senior economist for Brussels-based research group Bruegel.  Each month of confinement in France cost the country roughly 3 percent of GDP, he added, citing INSEE.  All the more reason, some analysts say, for European collaboration in avoiding such a scenario — as EU leaders finally did Monday, in adopting the recovery package after marathon talks. European Commission President Ursula von der Leyen, left, and European Council President Charles Michel address a media conference at an EU summit in Brussels, July 21, 2020.Could have done better The increase in European cases dwarfs that of the United States, with its recent spell of record daily cases. The pandemic’s hotspot has long moved on from Europe, where Italy and Spain topped global charts in April. Still, many observers say the region could have done a lot better in managing the pandemic.  A Monday New York Times article described Europe as “behind the curve” in managing the first wave, its coronavirus pandemic plans and sense of readiness built on a sand castle of “miscalculations and false assumptions.” National stockpiles of masks and other medical supplies existed only on paper, the newspaper reported, with acquisitions based on presumed supply chains that were disrupted by the pandemic.  “I think now, at least, they are better prepared,” economist Claeys said, with certain items like masks in good supply. “That will be helpful in avoiding another lockdown.”  New research from Britain’s University of Southampton points to another area where European countries should coordinate more; in lifting lockdowns and other virus-curbing measures.  Meanwhile, the university’s WorldPop study published Friday in the journal Science and mapping several scenarios, found any virus resurgence could be brought forward by up to five weeks if European states acted independently in lifting restrictions.  “The danger is you would have this case of whack-a-mole if it’s not coordinated, where some places have lower cases, while others experience an increase,” said Nick Ruktanonchai, the study’s lead author.   While Europe governments did not coordinate their lockdowns, he said, life didn’t immediately go back to normal after they were lifted. Among the population, “there was a fair amount of adherence for a while” to restrictive measures, helping to even the playing field.  Now, with cases still relatively low across the EU, “time has essentially been bought,” Ruktanonchai said, to build up infrastructure to cope with an “inevitable” second wave. Among other needed investments, he said: cross-border testing and contact tracing.  Yet not all European countries have rolled out contact tracing apps. Some that have, including France, found very little public interest — and the different European apps are not all compatible.   A different economic story  Still, these and other virus-curbing mechanisms may be needed sooner, rather than later.  Sweden, which did not go under lockdown, has seen a sharp rise in cases in recent weeks, but also a decline in serious instances and deaths.  Belgium has also seen an overall caseload increase, with numbers doubling in some areas.  The country was among the world’s worst hit by the virus on a per-capita basis, and virologists warned Friday the country could be at the start of a second wave, the Reuters news agency reported.  Meanwhile, the EU’s newly agreed on recovery package has ushered in some needed good news. Overall, Bruegel’s Claeys believes, the bloc has done a better job managing the pandemic’s economic fallout than its health one. “I’m still waiting for a second New York Times article saying that even if Europe maybe was not prepared, on the economic front we gave a very good response,” he said.  In countries like Germany, France, Ireland and the Netherlands, governments have heavily subsidized payrolls, allowing coronavirus-idled workers to remain paid.  The European Central Bank rolled out a vast bond buying program to help member states weather the crisis, while the EU relaxed fiscal rules, allowing those states to run up bigger deficits through massive rescue packages.  In both cases, Claeys said, Europe has “learned from its past mistakes” — notably its sluggish response to the 2009 global financial crisis.  While Claeys had hoped for a bigger share of non-repayable grants in the newly agreed to EU recovery package, its passage “shows Europe is able to act in a relatively short amount of time,” he said. “That it’s ready to do things together — and that it’s a sustainable construction.”  

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